Investors appear to be taking a more cautious approach to Australian gold floats this year, with companies undertaking more realistic capital raisings and witnessing modest trade in their first days on the ASX.
The most recent gold IPO is Kalamazoo Resources Ltd., which hit the boards Jan. 16 following the completion of a fully underwritten A$5 million raising and traded at a premium of just 5%.
By comparison, fellow Australian junior Egan Street Resources Ltd. rallied 60% on its first day on the ASX in mid-September 2016.
While Egan Street continued to fare well in late 2016, gaining as much as 70% to reach a peak of 34 Australian cents in October, the company has since pared back its gains and is now trading at about 27 cents.
MineLife analyst Gavin Wendt told S&P Global Market Intelligence that there was a lot of hype around gold in late 2016, prior to Donald Trump's election as U.S. president, and investors were getting into gold floats simply because other players in the sector had done well.
"If the quality of project is there and the quality of management is there then I think they can raise funding, they can get to the starting line and list," he said. "The issue of course is that a lot of these projects have been pulled out of the bottom drawer, they've been around before many, many times.
"So they aren't necessarily anything new or anything that's particularly interesting or prospective and I think sometimes unfortunately we see some rather ordinary offerings come to market and getting listed, but when we see a pullback we tend to see a welcome mode of caution coming back into the market again."
Although the outlook for gold is positive for 2017, investors are being a bit more wary about putting their money into gold stocks.
"You can have positive circumstances for gold like we've got now, but that sort of hypomania that was around towards the end of  has probably come out of the market and I think that's a good thing," Wendt said.
"People will focus more on the fundamentals and the actual investment credentials of a particular float."
Horizon Gold Ltd., which was spun out of Panoramic Resources Ltd., debuted on the ASX just before Christmas and traded 12.5% less than its IPO price of 40 cents, while Westgold Resources Ltd., which emerged from Metals X Ltd., witnessed subdued trading following its listing in early December 2016.
However, Somers & Partners analyst Duncan Hughes said the restricted trading was mainly due to the limited liquidity in these companies.
"Panoramic obviously still holds 51% of [Horizon's] stock, which isn't going to trade, plus in the case of Horizon there's a major shareholder that is pretty sticky as well," he told S&P.
"So it's nice for them in terms of restricting downside pressure, but obviously there's not a lot of free float going around so you're not going to see the opposite happen with a lot of trading."
Hughes said in the case of Westgold, it was an in-specie distribution from predominantly long-term Metals X holders and a lot of them would have been in Metals X for the gold.
"So their tendency to trade those shares are probably somewhat limited," he said.
Trading in Westgold, however, has picked up since the end of 2016, with shares now sitting about 14.5 cents higher than the Dec. 6, 2016 closing price of A$1.72. Meanwhile, Horizon Gold is still trading below its IPO price at 37 cents.
The expectation is for more resource floats this year, but it is more likely that only gold plays with good quality projects will make the cut.
Currently, there are about seven gold companies hoping to list on the ASX in the first three months of the year.
Blackstone Minerals Ltd. is aiming to be first in line and hit the boards before the end of January, followed by Ardea Resources Ltd. on Feb. 9, Huntsman Resources Ltd. on Feb. 21, Nelson Resources Ltd. on Feb. 28, Traprock Mining Ltd. on March 1 and Matador Mining Ltd. on March 2.
E2 Metals Ltd., meanwhile, deferred its listing until early 2017 and is yet to relaunch its IPO and set a new target listing date.